Initially, this tax was proposed to replace the fixed annual tax (Imposition Forfaitaire Annuelle) and the company social solidarity contribution (Contribution sociale de solidarité des sociétés). However, it appears that for the time being, the company social solidarity contribution would be maintained, at least for 2014.
Tax on gross operating income
Based on what little information is publicly available, it appears main features of the tax on gross operating income would include—:
- Scope of application - The tax would be paid by companies subject to corporate income tax as well as listed real estate investment companies (SIICs) operating a business in France and whose turnover exceeds €50 million. To determine the €50 million threshold, companies that are members of a tax consolidated group would have to take into account the turnover of all the companies within the group.
- Tax base - The gross operating income would be calculated based on the difference between (1) the value added (within the meaning of the company value-added contribution) and (2) personnel expenses plus taxes deducted from the operating income. In the case of a tax consolidated group, it would not be possible to consolidate the positive and negative gross operating incomes of each member of the group.
- Tax rate - The rate of tax would be 1.15% of the gross operating income. However, the tax rate has been subject to much discussion and may not be final and definitive.
- Due date - The tax would be due at the end of the fiscal year relating to the tax period taken into account for purposes of computing the company value-added contribution and would be paid along with the final balance of corporate income tax. Concerning tax consolidated groups, the filing of the tax return as well as the tax payment would be made by the parent company.
- Deductibility - The tax would not be deductible from a company’s corporate income tax base.
- Proposed effective date - The tax would apply as from the tax period ending on 31 December 2013.
Tax professionals in France have observed that this tax could have a major impact on the industrial sector, in that the tax base would not take into consideration depreciation and similar provisions.
For more information, contact a tax professional with KPMG’s French tax center in New York or with Fidal Direction Internationale* in Paris:
Gilles Galinier-Warrain, French Tax Center, KPMG LLP, New York
Olivier Ferrari, Tax Partner
+33 (0)1 55 68 14 76
Patrick Seroin, Tax Partner
+33 (0)1 55 68 15 93
*Fidal Direction Internationale is a French law firm that is independent from KPMG and its member firms.